Silver is a commodity that has been used as a store of value and as money for thousands of years. The price of silver, just like other commodities such as gold and copper, fluctuates due to supply, demand, and speculation of future prices. Silver trading is conducted in several markets around the globe.

Silver Futures Contracts:
Silver futures contracts are commitments to make or accept delivery of a specified quantity and quality of silver during a specific month in the silver futures at a price agreed at the time the commitment is made.

Approximately 99% of silver futures contracts traded every year do not result in delivery. Traders generally offset their silver futures positions before their contracts come to maturity. The difference between the initial sale price of the silver futures contract and the price of the offsetting transaction determines the realized profit or loss.

Silver Options:
The silver industry deals with price uncertainty by hedging against adverse silver futures price movements. Silver options on futures open a host of flexable, cost effective trading strategies. An option is a derivatives contract that gives a buyer the right, but not the obligation, to purchase, in the case of a call (or sell in the case of a put), for example, a futures contract, at a predetermined price (the strike price) and until a specified date. If the price of the underlying item is traded higher than the strike price before the expiration date, it has intrinsic value (the amount above the strike price, and can be exercised into the underlying item or traded for the amount of the intrinsic value.

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